Some of House of Fraser’s suppliers have put planned arrangements with the retailer “on hold”, amid growing fears about the department store chain’s future.
Drapers spoke to several clothing suppliers this week who say they are assessing future plans with HoF in the light of the uncertainty about its financial footing.
Accountancy firm EY has been drafted in to advise its lenders, which include HSBC, while Rothschild has been appointed to oversee its debt refinancing. It is understood that HoF’s board has not yet drafted in a formal adviser on refinancing options.
In the meantime, one supplier has decided to withhold deliveries to HoF.
She said: “I’m really worried. I’m holding shipments now and unless [they] discuss payment terms, I’m not releasing the goods.”
One of HoF’s brand partners told Drapers he had planned to roll out new store fits in some of its shops but had “put them on hold” until he received more assurance.
He said: “I’m optimistic a solution will be found, but I’m growing nervous.
“What can we do? We have to have confidence in [its] management. But there will be a need over the next seven days to have some reassuring news to maintain optimism. We all hope they can get their credit line extended – it’s too important a business for it to fail.”
Another brand was offered new space for its store concessions, but said he would not be taking it: “The current space is a manageable risk [if] not ideal.
“It is a massive concern that they [seem to be] underfunded – and I’m not sure what is happening to the potential sale of [Chinese conglomerate Sanpower’s] 51% stake. The market is very turbulent.”
A spokeswoman for the retailer would not comment on the suppliers’ actions, but said: “House of Fraser is a privately owned business. We have the full financial support of our shareholders.”
In an email dated 24 March seen by Drapers, Williamson reassured suppliers that “it continues to be business as usual at House of Fraser”, and that it is “executing a plan to put the business on to a sounder financial footing”.
“We are a high-profile brand on a high street that is facing challenges we all know about. As we have said before – onwards and upwards, and thank you for your ongoing support.”
A source familiar with the situation told Drapers “all options are on the cards at the moment”, adding: “The management team has a lot to do, but they know what the challenge is – it’s a difficult lending environment, the ownership scenario is complex, and they have a difficult real estate portfolio with very long leases on some stores.
“The banks have got two choices: to continue supporting [it] and hope [chief executive] Alex Williamson’s strategy will pay off. If they don’t, another brand disappears, and most of the banks have already taken a hit over the past couple of weeks with a variety of players [exiting] the market.”
HoF sold its brand names and associated intellectual property of the brands it scrapped last year to Guangzhou Sunrise Trading for £30m.
Earlier this year, the company also said it had identified £26m of annual savings – £10m of which had already been made – and there was “good progress” in delivering a further £16m in 2018.
In September, House of Fraser announced a £25m ”cash injection” from Sanpower.